Q4 2022 U.S. office market overview

The U.S. economy became more distressed in November and December, marked by more than 60,000 tech layoffs and a sudden 58.8% drop in office job postings from November to December – predictive indicators of office demand. Tepid leasing activity in Q4, -46.2% vs. the historical quarterly average, embodied how occupiers are navigating mounting economic distress and evolving workplace strategies as return-to-work levels are just 42.1% relative to the same period before the pandemic. Still, efficient, sustainable and amenity-rich offices are substantially outperforming the broader market, accentuating a trend that has persisted in recent years.


Return-to-office rates, December 2022 relative to December 2019

Office employers continue to embrace hybrid work schedules as they navigate their future workplace strategies.


Change in office job postings, November to December 2022

Greater prospects of a financial economic recession caused a severe and sudden pullback in office job postings, a leading indicator of office demand.

Unemployment rate for bachelor’s degree holders

The office economy had been on strong footing, though terminations in November and December are expected to weaken this and other economic indicators.

Total availability rate for 1980s Class A assets

These assets do not compete with older properties on pricing and newer properties on sustainability, amenities or efficiencies, causing heightened availability rates.

Rent premium for offices with tenant lounges

Tenant lounges and conference centers are in demand, with occupiers vying to incentivize their workforce to return to the office and decrease their real estate overhead costs.

Quarter-over-quarter change in office cap rates

Spiking risk-free rates, +215bp year-to-date, expectantly applied upward pressure on office cap rates in Q4 2022. Patient investors can capitalize on these conditions, especially if spreads widen to more attractive levels. 
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